Reasons you Might be Paying a Higher Premium

Written by : Knowledge Centre Team

2023-02-20

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Reasons for paying a higher premium for your life insurance policy could be many. The premium amount varies from person to person as it depends on various factors. Therefore, it is important that you know the factors that may impact your premium.

There could be some factors which may not be under your control. However, some of them may be under your control. You have a chance to lower the premium that you pay if you understand about each of the factors that has an impact on the premiums you pay for your life insurance policy.

Listed below are the major factors that influence the premiums of a policy:

Age

The older you get, the higher your insurance premium becomes. The reason is at a younger age, the chances of developing any critical health condition is low. Even if we do, we are likely to recover faster due to a robust immune system. As compared to younger people, older people are more susceptible to developing critical conditions due to ageing. Hence, it is always advisable to buy life insurance policies when you are young.

Know more.
Gender

Various studies have shown that women live longer than men. This is the primary reason why women have to pay a lower premium for their life insurance policy as compared to men.

Block your Premium Rate by Paying a Higher Premium

Family Medical History

It is another factor that plays a vital role in deciding the premium you have to pay. Suppose an immediate family member has health issues such as heart disease, diabetes, cancer, neurological disorders, or other hereditary disorders. In that case, it puts you at a higher risk of getting affected by it. Hence, depending on your family medical history, you may be asked to pay a higher premium because the likelihood of claiming insurance costs is more.

Learn how your family history impacts the premium.
Smoking or Consumption of Tobacco

Smoking or tobacco consumption puts you at a higher risk of diseases like heart attacks, strokes, lung disorders, infertility, and cancer. Hence, the insurance premium amount for smokers and tobacco users is significantly higher than for those who do not smoke or consume tobacco. You need to disclose this habit to your insurer.

If you already have an insurance policy with a smoker status, and if it has been a while since you quit smoking, check with your insurance company if the change from ‘smoker’ to ‘non-smoker’ status will affect your premium amount.
Alcohol Consumption

If you consume alcohol daily, your insurer may charge you a higher premium amount. It is because excessive alcohol consumption puts you at a higher risk of getting liver disorders and other ailments.

Read how alcohol consumption impacts your life insurance policy.
Occupation

When you apply for a life insurance policy, insurance companies always ask about your occupation. Professions such as pilots, stunt men, firefighters, lifeguards, people who work in the armed forces, construction workers in high rise buildings, toxic gas laboratory workers, technicians working at radiation plants are considered to be high-risk jobs. Your premium could be higher if you work at a place that has risk to life.
Current Medical Condition

Almost all insurance companies require you to undergo a complete health check-up before they issue you a policy. They access and review your health statistics to understand if you have any pre-existing health conditions. If you have hypertension, arthritis, diabetes, asthma, thyroid, obesity, cholesterol, or kidney disorders, you may pay a higher premium. It is because people with health conditions are more likely to claim insurance for various tests, diagnostics, medication, and treatments.

Your insurer will assess the risk before issuing you an insurance policy. If you have undergone any surgeries or procedures in past, you need to disclose them to your insurer. Some insurance companies may even ask you to serve a waiting period before your policy comes into force.

Hobbies

Hobbies, which involve a significant amount of risk, such as skydiving, bungee-jumping, mountaineering, racing car driving, or deep-sea diving are considered to be risky. It is because you are regularly exposed to dangerous activities that can hurt you. It eventually increases the likelihood of claiming insurance.

However, the activities falling under the ‘high-risk’ category may vary across insurance companies. Hence, if you are involved in such activities, you need to compare quotes from various life insurers and choose the best one for your needs.
Body Mass Index (BMI)

If you are overweight or have a sedentary lifestyle, you are more prone to lifestyle disorders like hypertension, diabetes, and heart attacks. People who have a BMI of above 30 are considered to be obese. People who have normal BMI (Body mass index) as per their age and height have a significantly lower premium than those overweight or unfit.

Calculate your BMI.
Policy Chosen by You

The insurance premium amount is directly proportional to the sum assured and the policy term. Sum assured is the maximum amount you can claim from your insurance company in case of a medical emergency.

A policy with more extensive coverage and a longer time frame will cost more than the insurance plans taken for a small sum and shorter period.

Hence, the type of policy determines how much premium you will be asked to pay. If you select any additional covers or riders like critical illness coverage, disability cover, waiver of premium, the cost of insurance is likely to increase.

When you buy a life insurance policy, it is essential to look at all the factors determining the premium. Make a well-informed decision to buy a policy that suits all your needs. Take quotes from various insurers. You must disclose everything to your insurer and not withhold any information. Buy a policy on time and pay less on premiums.

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised to exercise their caution and not to rely on the contents of the article as conclusive in nature. Readers should research further or consult an expert in this regard.